Thursday, September 23, 2010

Cleveburgh Rising

The next Silicon Valley won't look like Silicon Valley. The era of greenfield economic development is over, at least in most OECD countries. Here in the United States, we've done a good job of picking that low-hanging fruit. The next innovation heartland will be in the Rust Belt, brownfield economic development.

Richard Florida, and others, are very good at mapping where the current clusters are located. We also understand why regions such as Silicon Valley are now economic powerhouses. Unfortunately, that hindsight doesn't project well into the future. What we read and hear is that the current winners will only get stronger. In many cases, that's likely true. But there will be new winners. How might we divine them?

Primary metals and all of manufacturing continued to decline as a share of metro Pittsburgh’s employment earnings. But it didn’t consign the region to permanent low- prosperity status. By the 1990s Pittsburgh was at or above the national average in per capita income even though primary metals accounted for only 4 to 5 percent of employment earnings and 17 to 19 percent for all of manufacturing. In 2008 Pittsburgh returned to its previous peak compared to the nation—104 percent of the national average. Of the 55 metropolitan areas with populations of a million or more, it ranked 16th and was more prosperous than Dallas, Raleigh/Durham, Austin, Portland and Atlanta.

In terms of prosperity, Pittsburgh hits way above its weight. If Cleveland could gets its act together, look out world:

Cleveland historically had the more diversified economy [than Pittsburgh] and traditionally was the most successful and largest city in the region. The city primarily built component parts, providing the essential industrial pieces to other mostly producer products. Companies such as Parker Hannifin, Standard Products, Cleveland-Cliffs, the Eaton Corporation, Yale & Towne, TRW, White Motor, and Sherwin-Williams exemplify the entrepreneurial efforts that build Cleveland.

This proud historical legacy is a blessing and a curse. It is a curse because the industrial decline of Cleveland has been more gradual, punctuated by many efforts to restructure alongside a common belief that corners were being turned—only to face another setback amid the steady decline of employment in industrial manufacturing across the Midwest. But it is a blessing because many parts and components are still manufactured in the city, along with the important service components that accompany their distribution. These industries remain highly competitive in the global economy, sustaining the region for export markets and defining a source of expertise and strength.

Pittsburgh shed its manufacturing base much more quickly than Cleveland did. Hence, Detroit looks at Pittsburgh as opposed to Cleveland as a model for a way forward. Ironically, Cleveburgh is a tried and true economic geography that lends itself to cluster-based economic development:

The fortunes of regions, of course, are tied to the fortunes of their firms and industries. The success and specialization of 19th-century achievements are still visible and still define many of the expectations, capabilities, and obstacles in this region. Writing in 1936, economic geographer Richard Hartshorne noted that the Pittsburgh-Cleveland region—geographically situated in western Pennsylvania and northeastern Ohio—was one of the most important regional economies in the United States.

The name "Richard Hartshorne" should be familiar to anyone who majored in geography at university. (I didn't realize he was born in Kittanning) Cleveburgh was obvious in 1936. Cleveburgh should be obvious now. It isn't. I think we are looking at the first regional innovation cluster to cross state boundaries. At least, where better to test the policy idea?

Cleveburgh, not the Great Lakes Economic Initiative or the Global Midwest, is the policy geography of the future. The TechBelt is further along than anything John Austin or Richard Longworth has proposed. The reason why is buried in obscure texts about historical geography. If only more analysts and pundits read them.

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